Japan Salary Calculator 2020/21

Calculate your take home pay (that's your salary after tax), with the Japan Salary Calculator. A quick and efficient way to compare salaries in Japan, review income tax deductions for income in Japan and estimate your tax returns for your Salary in Japan. The Japanese Tax Calculator is a diverse tool and we may refer to it as the wage calculator, salary calculator or after tax calculator, it is however the same calculator, there are simply so many features and uses of the tool (income tax calculator, there is another!) that we refer to the calculator functionally rather than by a specific name, we mention this here to avoid any confusion.

Japan Tax Calculator 2020/21
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Advanced Japan Salary Calculator 2020/21
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Japan Tax Calculator. This image shows the Japanese flag and information relating to the tax formula for the Japan Tax Calculator

How to calculate your salary after tax in Japan

Follow these simple steps to calculate your salary after tax in Japan using the Japan Salary Calculator 2020 which is updated with the 2020/21 tax tables as published by the Japanese National Tax Agency (国税庁)

  1. Resident Status. The Resident status in Japan here refers to your tax status, not necessarily your visa type or domicile. From a tax calculation perspective, your Tax Resident Status affects non-refundable tax credits and income tax allowances. As with most countries with an international workforce, Japan has numerous tax/fiscal Memorandums of Understanding (MOU) and Tax Treaties in place though the following are valid for the majority of taxpayers:
    1. Permanent Resident: A taxpayer who has lived in Japan for at least five years and intends to live in Japan permanently.
    2. Non-Permanent Resident: A taxpayer who has lived in Japan for less than five years and has no intention of living in Japan permanently. Non-permanent residents pay tax on all income that is earned in Japan or moved to Japan from another country. Income from countries outside Japan which remains in that country is except from tax in Japan.
    3. Non-Resident: A taxpayer who has lived in Japan for less than one year and does not normally live in Japan. Non-residents pay tax on income earned in Japan, they do not pay tax on income from outside Japan (these is either calculated in thier domicile country or not at all, depending on tax/fiscal MOU between the domicile country and Japan).
  2. Employment Income. This is the amount of salary you are paid. The Japanese tax calculator assumes this is your annual salary before tax. If you wish to enter you monthly salary, weekly or hourly wage, then select the 'Advanced' option on the Japanese tax calculator and change the 'Employment Income and Employment Expenses period'.

That's it! Just three simple steps to calculate your salary after tax in Japan with detailed income tax calculations. Need more from the Japan Tax Calculator? More detailed salary calculator or a wage calculator? Simply select 'advanced' to access more features of the tax calculator.

Advanced Features of the Japan Income Tax Calculator

  1. Pension Contributions This is the pensions rate defined for 2020 in the 2020 income tax rates and thresholds. You can edit the rate as required.
  2. Fixed Pension or % of Salary The default pension contributions are set as a percentage of your gross salary, you can change this to a lump sum if you have a different salary package with your employer
  3. Employee Social Security Contributions Rate This is the Employee Social Security Contributions rate defined for 2020 in the 2020 income tax rates and thresholds. You can edit the rate as required.
  4. Employer Social Security Contributions Rate This is the Employer Social Security Contributions rate defined for 2020 in the 2020 income tax rates and thresholds. You can edit the rate as required.
  5. National Health Insurance Rate This is the National Health Insurance rate defined for 2020 in the 2020 income tax rates and thresholds. You can edit the rate as required.
  6. Tax Assessment Year The tax assessment year is defaulted to 2020, you can change the tax year as required to calculate your salary after tax for a specific year.
  7. Your Age You age is used to calculate specific age related tax credits and allowances
  8. Number of Children and Number of Children who qualify for Dependents Allowance The number of children you have and their status is used to calculate specific dependents related tax credits and allowances
  9. Number of Working Days in the year The number of working days in the year is used to calculate average daily / weekly etc. earning for the salary calculation and after tax illustrations
  10. Number of hours worked per week The number of hours worked in the year is used to calculate average daily / weekly / hourly earnings etc. for the salary calculation and after tax illustrations
  11. Number of weeks worked in the year The number of working weeks in the year is used to calculate average daily / weekly etc. earning for the salary calculation and after tax illustrations
  12. Employment Income and Employment Expenses period The default Employment Income and Expenses period is 'Annual' meaning the amount you entered as your Employment Income is your annual salary before tax. You can change this to monthly, weekly, four weekly, hourly salary etc. as required to calculate your net pay.

Additional features available with the Japan Tax Calculator

In addition to the features and options described above, the Japan Tax Calculator also has the following features:

  1. Select Simple or Advanced. The Simple option is mainly used for those who want to quickly calculate their salary after tax, perhaps to review an annual pay rise or incremental pay rise. The Simple tax calculator is also useful for comparing salaries in Japan, great if you are looking at a new job in Japan or comparing salaries in different industries in Japan. the Advanced Tax Calculator is designed for those who wish to calculate their tax commitments with more detail, for example you may with you calculate your monthly/quarterly/annual tax withholdings to ensure you retain sufficient revenue to cover the cost of your annual self-assessment tax return.
  2. Normal or Full Page View. The Normal view allows you to use the Japan Salary Calculator within the normal content, this means you see the standard menus, text and information around the calculator. This view is better suited to those who are doing a quick salary comparison or quickly estimating their monthly tax withholdings. The Full Page view hides the menus and unnecessary text, providing a clear, uncluttered view of the Salary and Tax Calculator, this is the best view for competing more advanced tax calculations as there is less distraction whilst entering key income and expense information.

Japan Income Tax Calculators

Taxation in Japan

Japan is a country in East Asia. It is an island located in the Pacific Ocean. The literal meaning of the word 'Japan' mean sun origin and it is also known as the "land of the rising sun"

Japan has a highly developed economy that stands at the second, on the list of largest developed economies in the world. Japan has the third largest automobile manufacturing industry and has the largest electronics goods industry in the world.

Various kinds of taxes levied in Japan are explained ahead in this article.

Tax Administration of Japan

Tax Administration in Japan is managed by the National Tax Agency (NTA). The agency is responsible for revenue administration and tax collection in Japan.

The NTA was organized in 1949 as an external organization of the Ministry of Finance. There are other departments that work alongside NTA, The National Tax Collage which trains tax officials, while the National Tax Tribunal works for examining requests review that are received from taxpayers.

Personal Income Tax in Japan

Compliance and filing requirements for individuals

Tax year for Individuals is the same as the calendar year from 1 January to 31 December.

For employment income, the employer is required to withhold the income at source.

Tax returns have to be filed by 15 March of the following year on an individual base, consolidated returns are not permitted. Penalties may be imposed for failure to comply with tax laws.

Tax Basis

Permanent residents are taxed on worldwide income and a nonresident is subject to PIT only on his Japan-source based income or foreign income that is paid or remitted in into Japan. Individuals earning income from business are taxed as per corporate income tax regime.

Taxable Income

Most income, including employment income, such as salary, bonuses, and investment income like stocks and bonds, and other benefits in kind (except some specific items) are regarded as taxable income.

Income Tax Rates in Japan

The latest Personal Income Tax (PIT) rates are avialable in the Income Tax Tables for Japan

Notes: From 1 January 2013 a surtax of 2.1% are added to the national tax.

The rates below are excluding Japan Municipal Tax and Prefectural Tax

Non residents in Japan are taxed at the standard rate of 20% plus 2.1% surtax. Additionally, they may be subject to the local inhabitant's tax at 10% if they are registered as a resident as of 1 January of the current year.

Capital gains

Capital gains from the disposal of immovable assets (investments) are taxed at a flat rate of 20%. Capital gains from real estates are taxed at 20%. Short term gains are taxed at 39%

Other taxes

Real property tax

This tax is imposed by the Municipality in Japan. This is assessed at 1.7% per year, including city planning tax. A real estate acquisition tax 3% to 4% applied to the assessed value at the time land and buildings are acquired.

A real estate registration tax applied to the assessed value of real property at rates ranging from 0.4% to 2%, depending on the type of transfer.

Inheritance, estate and gift tax

Progressive rates ranging from 10% to 55% apply on Inheritance, estate and gifts in Japan.

Deduction, allowance and exemptions

Deduction and allowances are available on social insurance premiums under Japanese government plans, life insurance, earthquake insurance, charitable payments qualified medical expenses etc. Provided they meet the defined conditions.

Exemptions are available for elderly and disabled. Personal deduction is allowed for dependent spouse and children over the age of 16 and above. This can be claimed only if individual income does not exceed JPY 10 million.

Corporate Income Tax

Compliance and filing requirements for corporations

The tax year is generally calendar year. However, corporations may opt for a different tax year at the time of incorporation, this should not exceed 12 month period.

Japan operates on a self assessment regime. Generally, CIT returns have to be submitted within 2 months following the company's fiscal year end. Taxes must be prepaid within 2 months after the sixth month end of a calendar year. This is either based on 50% amount of previous year's tax amount or actual tax liability for the 6 months of the current year.

Companies are allowed to file a 'blue' tax return, provided they apply before each tax year beginning, or for new corporation after the first year ending, along with meeting certain requirements on accounting system and record keeping. Filing 'Blue' tax returns comes with various benefits that include, deduction, loss carry forwards and accelerated depreciation.

Consolidated returns are permitted, provided they meet defined conditions. Penalties may be imposed for failure to comply.

Basis of Tax

Resident companies are subject to CIT on worldwide income and nonresident companies are subject to CIT only on Japan-source based income. Branches are taxed in the same way as subsidiaries. Income generated by permanent establishments of foreign companies in Japan, are subject to CIT.

Taxable Income

The taxable income in each accounting period is a gross taxable revenue minus deductible expenses. Gains or losses occurred due to transfer between 10% subsidiaries are not recognized in taxable income.

Tax rate

A standard corporate income tax rate is 23.2% applies to the companies that operate in Japan with a share capital over JPY 100 million.

Local inhabitants tax is levied by both prefectures and municipalities that is payable by the companies.

Additionally a local enterprise tax is also levied by the prefecture on corporations.

The effective rate for a corporation for a company that is based in Tokyo with a paid up capital of JPY 100 million is approximately 30%

Foreign tax credit

Foreign tax paid may be credited against Japanese tax, subject to certain limitation.

Tax Incentives

Various tax incentives are available, including a tax credit on research and development (R&D) Credit under the tax incentive regime This is with the exception of some large corporations that do not satisfy certain conditions for the tax year that start between 1st April 2018 and 31 March 2021.

Tax incentives can be availed on increase of wages and salaries in the tax year that starts between 1st April 2018 and 31 March 2021.

Withholding Tax

Dividends

Dividends paid to nonresidents are subject to a 20% (plus 2.1% surtax) withholding tax. The rates may be reduced If they fall under tax treaties. A reduced withholding tax of 15% (plus 2.1% surtax) is applicable to the dividends paid to nonresidents by a listed company.

Royalties & Interest

Royalties & Interest are subject to a 20% withholding tax unless they fall under tax treaties. A 2.1% surtax effectively increases the local tax to 20.42%

Rental Income

Rental income for corporations is treated as normal business income.

Technical service fee

This is subject to withholding tax of 20% on Japan sourced service fee, unless reduction or exemption is provided under a tax treaty.

Other taxes on corporations

Real property tax

This tax is imposed in a similar way that of Individuals (Please refer real property tax on individuals)

Capital Duty

This is included in the local inhabitant tax collected from the enterprises.

Stamp duty

The tax amount is generally based on the amount stated in the documents, this varies between JPY 200 to JPY 600,000. Additionally, this is levied on the transfer of assets as well.

Customs duties

A customs duty is levied on imported goods based on customs tariff table.

Excise duties

This is levied on products such as: Alcoholic beverages, tobacco products, gasoline and aviation fuel.

Consumption tax (VAT)

Japanese consumption tax is similar to a Value Added Tax (VAT) in European countries. Consumption taxes are generally applied for:

  • Supply of goods and services
  • Import of goods
  • Certain digital services provided by nonresidents in Japan
  • Sale and lease of certain assets in Japan

Rates:

The standard rate is 8%, including the national & local tax rates. This will be increased to 10% effective 1 October 2019 with exception of some food and non alcoholic drinks and newspapers that are issued more than twice a week.

Registration

The new companies with share capital under JPY 10 million are exempt from consumption tax. Old companies may choose to be a consumption taxpayer. Other than this, no registration procedure exists.

Filing and payment

The consumption tax returns must be fined and the payments are directly remitted to the tax authorities by the consumption tax payers.

Social security

Social security contributions are mandatory for both employers and employees. The employees are liable to contribute towards social insurance premiums that have various components. The highest combined employer potions are approximately 16.43%

Employers must withhold the employee's social contributions and make own contributions to the social security tax, this as well have several components. The highest combined employer potions are approximately 16.43%